Just wrapping your head around how cryptocurrency actually works is difficult. But understanding how MicroStrategy transformed itself from a run-of-the-mill software firm into the most popular bitcoin stock on the market is downright mind-boggling.
The short version: Michael Saylor, the co-founder of MicroStrategy, is a huge bitcoin bull. His software company started buying bitcoin in 2020, even selling debt to finance more bitcoin purchases. Now, MicroStrategy has amassed its own hoard of 331,200 bitcoins worth about $31 billion, making it one of the biggest bitcoin investors in the world.
The firm measures its gains using something called a “BTC yield,” which is the percentage change over time in how many bitcoins per share MicroStrategy owns. If that term doesn’t ring a bell, don’t feel bad—it’s probably because the company made the metric up.
Saylor’s bitcoin-buying zeal has transformed the stock into a key play for bitcoin bulls hungry for new and innovative ways to invest in their favorite cryptocurrency. As a result, MicroStrategy shares have jumped 114% in the last month alone. Year-to-date, the stock is up about 650%, and its market cap has breached $100 billion, making it as large as some of the biggest names on the S&P 500.
The flip side: Citron Research delivered a cold, hard reality check to MicroStrategy today, unveiling a short position on the company given that “Bitcoin investing is easier than ever” in vehicles like ETFs and through crypto exchanges. “$MSTR’s volume has completely detached from BTC fundamentals,” Citron explained in an X post. MicroStrategy shares tumbled around 20% in response.
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The criticism is particularly cutting given Citron was once the first research firm to recommend MicroStrategy back in 2020.
Citron has a point: With the advent of spot bitcoin ETFs, you don’t really need to buy a bitcoin stock to gain exposure to cryptocurrency through an SEC-regulated investment vehicle. Even if you’re a fan of Saylor’s bold strategy, it’s tough to justify the company’s enormous leap in valuation—especially when the company’s balance sheet is filled with terms management made up.
Should you mine your portfolio for digital gold?
But as bitcoin ascends toward $100,000, the crypto mania is only gaining steam—warranted or not.
One play is investing in the companies that help power the boom, like bitcoin miners. While MicroStrategy largely gets its street cred from investing in bitcoin, stocks like CleanSpark Inc., Mara Holdings, and Core Scientific that all mine crypto are alternative ways to bet on bitcoin.
And with President-elect Trump hoping to ensure that all future bitcoin is mined in the US, the latest bitcoin bonanza isn’t likely to flare out anytime soon.—LB